1. (TCO F) Bingham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.

Work in process, beginning: Units in beginning work-in-process inventory| 400| Materials costs| $6,900|
Conversion costs| $2,500|
Percentage complete for materials| 80%|
Percentage complete for conversion| 15%|
Units started into production during the month| 6,000|
Units transferred to the next department during the month| 5,000| Materials costs added during the month| $112,500|
Conversion costs added during the month| $210,300|
Ending work in process: Units in ending work-in-process inventory| 1,200| Percentage complete for materials| 60%|
Percentage complete for conversion| 30%|

Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department. (Points : 25) |

2. (TCO G) - (Ignore income taxes in this problem.) Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo that will require the purchase of new mixing machinery. The machinery will cost $375,000, is expected to have a useful life of 10 years, and is expected to have a salvage value of $50,000 at the end of 10 years. The machinery will also need a $35,000 overhaul at the end of Year 6. A $40,000 increase in working capital will be needed for this investment project. The working capital will be released at the end of the 10 years. The new shampoo is expected to generate net cash inflows of $85,000 per year for each of the 10 years. Axillar's discount rate is 16%.

Required:
(a) What is the net present value of this investment opportunity? (b) Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo? (Points : 35) |

...Part 1: Optional Section In this part, the learners have to choose four of eight questions for answering. If you give the right responses, you will obtain 2.5 marks per one statement (i.e. this part is for 10 marks). 1. Why is adherence to ethical standards important for the smooth functioning of an advanced market economy? 2. Briefly describe what is meant by enterprise risk management. 3. Describe what is meant by a “pull” production system. 4. Describe the schedule of cost goods manufactured. How does it tie into the income statement? 5. Why are product costs sometimes called inventoriable costs? Describe the flow of such costs in a manufacturing company from the point of incurrence until they finally become expenses on the income statement. 6. Is it possible for costs such as salaries or depreciation to end up assets on the balance sheet? Explain. 7. “The variablecost per unit varies with output, whereas the fixed cost per unit is constant.” Do you agree? Explain. 8. Only variablecosts can be differential costs. Do you agree? Explain. Part 2: Compulsory Section Problem 1 (15 marks) Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele. Before finalizing these plans, two stores...

...Running head: VARIABLECOSTSVariableCosts
ACC/561
June 12, 2012
VariableCosts
Any cost which is not fixed and will change in same amount when there is change in production volume is accounted as variablecosts. This also means that they change in total rather than per unit whenever there is production or activity change. In production- labor, material or overhead could be the variablecosts involved in the business. In Fitness center, there are different variablecosts involved and each variablecost has its own unit and it changes with the change in the activity of that unit.
Cleaning Supplies: No customer would like to exercise or do workout if the workout area and machines are not cleaned properly. Therefore cleaning equipment is needed to clean machines and disinfect workout area on daily basis. The cost of supplies increases or decreases depending on how many customers attend the facility. If number of customers increases then the supply used for cleaning the area and equipment also increases (Attwood, 2011)
Water and Laundry costs: Cost involved in customers taking shower and using towels, after exercise also depends on how many customers took shower in facility. Water and laundry costs...

...why demand iselastic in the northwest segment of the demand curve and inelastic in the southeast segment.
Product Price Quality Demanded
$5 1
Vb 4 2
3 3
2 4
1 5
Answer: 1/1.5 / ¼.5= .67%/ 22%= 3.05
Ch 22 #7
1. Key Question A firm has fixed costs of $60 and variablecosts as indicated in the table on the following page. Complete the table and check your calculations by referring to question 4 at the end of Chapter 23.
1. Graph total fixed cost, total variablecost, and total cost. Explain how the law of diminishing returns influences the shapes of the variable-cost and total-cost curves Graph AFC, AVC, ATC, and MC. Explain the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain in nontechnical terms why the MC curve intersects boththe AVC and the ATC curves at their minimum points.
Explain how the location of each curve graphed in question 7b would be altered if (1) total fixed cost had
been $100 rather than $60 and (2) total variablecost had been $10 less at each level of output.
Total Product Total Fixed Cost Total VariableCost Total Cost Average Fixed Cost Average VariableCost Average...

...4/15/2013
BBUS 373 Cost Accounting
Vermont Teddy Bear Case Study
1. Summary
After analyzing Vermont Teddy Bear’s existing and new strategies, we highly encourage the company to adopt the new strategy. As we compute and compare the sales, profit, contribution margin, and operating leverage of existing strategy with those of the new strategy, we found that the new strategy enables the company generate more sales profit and lower the operating risk, despite having to spend an additional amount on radio ads and 1-800 number. However, after adopting the new strategy, we also confirm that the company has potential risk of generating a loss if the sales remain the same.
2. Problem identification
In the beginning two years, the company spent $900,000 on fixed costs, but annual sales were only $1.7 million. The low sales barely covered all costs and the company was at risk of losing money. The management team realized that they must develop a new marketing strategy to help increase their demand and sales while retaining flexibility in production and avoiding inventory build up. Otherwise, the company may run out of business. Before adopting new strategy, their operating leverage was also too high which means they faced a high risk of operating loss.
3. Analysis presented in supplemental tables/graphs:
Table 1 (Comparison...

...﻿CHAPTER 1 – COST VOLUME PROFIT-
MULTIPLE CHOICE QUESTIONS
1. CVP analysis can be used to study the effect of:
A. changes in selling prices on a company's profitability.
B. changes in variablecosts on a company's profitability.
C. changes in fixed costs on a company's profitability.
D. changes in product sales mix on a company's profitability.
E. All of these.
2. The break-even point is that level of activity where:
A. total revenue equals total cost.
B. variablecost equals fixed cost.
C. total contribution margin equals the sum of variablecost plus fixed cost.
D. sales revenue equals total variablecost.
E. profit is greater than zero.
3. The unit contribution margin is calculated as the difference between:
A. selling price and fixed cost per unit.
B. selling price and variablecost per unit.
C. selling price and product cost per unit.
D. fixed cost per unit and variablecost per unit.
E. fixed cost per unit and product cost per unit.
4. Which of the following would produce the largest increase in the contribution margin per unit?
A. A 7% increase in selling price.
B. A 15% decrease in selling price.
C. A 14% increase in variable...